Sunderland began well with most of the early possession, captain Bannon impressive early on with good defensive work.
McDougall had the first chance of the match with an effort that just edged wide. And a free kick from Bannon was saved comfortably by the Watford Keeper.
The best of the early chances fell to Sunderland with both sides passing well, as the game began to flow nicely.
Meads pace threatened but Watford defended well and managed to restrict the dangerous Sunderland forward.
The sides exchanged chances as the half progressed, with Watford forcing several corners and in reply Sophie Williams caused problems after firing a shot just over the bar.
A Greenwell free kick and a powerful effort from Sunderlands Northern Ireland international Rachel Furness were dealt with by the Watford defensive line.
With Sunderland controlling the first half, they needed a goal to assert their dominance.
But Watford broke late on in the half, and took the lead through Jo Wilson, who latched onto Kate Natkiels pass and stroke the ball into the net. Giving the home side an unexpected lead going into the break.
After the interval the visitors came out rejuvenated and upped the pace which was rewarded as Furness played a good ball over the top and into the path of Keira Ramshaw who cut inside and fired home to level the score.
Sunderland began to attack Watford from all areas after the goal as Holmes came close.
At the other end McDougall spurned a chance to put Sunderland ahead after good work from Gutteridge.
But it wasnt long before the visitors went ahead with Beth Mead causing trouble again in the oppositions box as she was upended in the area, which gave the referee no option but to point to the spot.
Kelly McDougall stepped up to powerfully drive home the resulting penalty and put Sunderland ahead for the first time in the match.
Sunderland should have put the game to bed soon after, with McDougall smashing the ball off the underside of the crossbar and the ball was scrambled clear.
The visitors came to rue their missed chances, as Watford came up with a late equaliser, as right back Holmes took out a Watford forward in the area resulting in another penalty, which was dispatched well by Wiltshire.
Late Sunderland pressure came to no avail, as Watford held on for a valuable point against the league leaders.
Sunderland though still top of the table, and are four points clear of rivals Leeds, going into next weeks derby against Newcastle.
A big thank you must go to the members of SAFC's London branch of supporters who came to Berkhamsted to cheer the Ladies on, after already attending the Portsmouth game a few weeks earlier. Their support is very much appreciated.
Sunderland...Laws, Bannon, Holmes, Greenwell, Wilson(Salicki), Williams, McDougall, Furness(Sutcliffe), Gutteridge, Ramshaw, Mead
A disappointed Sunderland manager Mick Mulhern spoke after the game, If Im honest it was two points dropped. We gifted Watford a goal in the first half but the response in the second half was exactly as I asked of my players. We got ahead but sometimes things happen in a game that you can't legislate for. We are still 4 points ahead and that's good but we all know it should have been 6.
Sunderland's next fixture is the Wear/Tyne Derby against Newcastle United in the League Cup, on Sunday 14 October, Hetton Centre (Eppleton CW), kick-off 2pm.
Sunderland Ladies surrendered their 100% winning record in a battling 2-2 draw at 3rd placed Watford on Sunday. Despite the result they still maintain a 4 point lead at the top of the Womens National Premier League. A goal down in the first half, Keira Ramshaw levelled early into the second period. Then Kelly McDougall gave the defending champions the lead with a penalty before Watford themselves equalised from the spot.